Personal Financial Statement FAQ’s from Coffman Capital

Perhaps the most important form in a loan package concerning the borrower is the Personal Financial Statement or PFS. The SBA form for this is called the 413 Personal Financial Statement. Paradoxically, since it is a government form, it is actually simpler than many of the PFS forms banks use or incorporate into their long-form loan applications. There are some simple tips that will help you complete the form so that it is best understood by the lender evaluating the application, and to make sure you include what they need to know.

Here is a list of things to keep in mind while you’re filling it out, starting on the left side with Assets, then Liabilities on the right:

This is a “snap-shot” of your financial condition so when you’re completing it, furnish the data as it is at date of the form. For example, if you expect to receive funds or pay off a loan, you may need to update it during the loan process, but you submit it as it is at the time.

The Business Name of Applicant is a reminder that your business is the borrower, so if you are buying a business and haven’t yet formed an entity (corp., LLC etc.), you should put New Entity, d/b/a the business name you are buying.

Cash on Hand and in Banks & Savings – put all the current balances you have, on whichever line seems right. A lender will combine these two as your “current liquidity” which is very important.

Note: You can include amounts you keep in cash in a safe etc., and if you need to deposit it in a bank, we can help you determine how best to document it.

2nd Note: This may or may not include business bank balances – remember they’re looking for total liquidity and this is where they look for it – just saying. It’s a judgment call, you may ask your Coffman representative to help you on this as we do with the entire form.

Accounts Receivable – These are personal receivables for any personal loans etc. Also: if you are using Gifted Funds for your cash injection to buy the business, here is where it goes. You just get a Gift Letter form from your Coffman representative and that’s sufficient to declare as an asset. Note: if you have a business with receivables, it’s probably included in the value of your business (Other Assets), and you don’t have to put them here.

Life Insurance – if you have a term policy, that’s zero as an asset. If you have a cash value policy, it is the amount you would get to surrender it.

Real Estate – this is the amount you think it is worth today – and mortgages go under Liabilities. If the spaces on page 2 of the form aren’t enough, Coffman Capital can provide a schedule to help.

Autos – remember to put year/make/model on page 2, section 5. Don’t over-think the value, just a guess will do – the lender will discount it to almost nothing for collateral.

Other Personal Property – commonly, a combined figure for personal property, furniture, jewelry, electronics, collections etc. is fine, without any sort of list (see Section 5, page 2). If you feel it’s important to declare a certain item by itself, you can do so. Note: Coffman Capital has a Section 5 Addendum you can use to more easily break down all of this, only because the form may not give you enough room.

Other Assets – things like your own business and deposit held by the broker or seller for your business acquisition go here.

Accounts Payable – you probably don’t have any to list, there may be exceptions. We all have bills, so you most likely don’t need to total them here.

Notes Payable to Banks and Others – a catch-all section for credit cards, student loans, all sorts of debt – that you did not put in the Installment Account (Auto) and Installment Account (Other) sections below it. And if that section on page 2 isn’t big enough, Coffman can provide an addendum for that as well.

Unpaid Taxes – usually, this is for an outstanding tax lien balance you have, not for normal installment plans or regular scheduled taxes – it’s a judgment call.

Other Liabilities – good place to put something you might not fit in another section – like a loan you signed for that you don’t pay yourself. Put the lender name, balance and payment in this box with explanation of who it’s for.

If you have other questions we’ll walk you through the form – and others – step by step. We hope this has been helpful and that you choose Coffman Capital for your Professional Business Financing!